Indian Financial System jaiib important questions and answers
Sl Question Answer
1 The structure that is available in an economy to mobilize Financial system.
the capital from various surplus sectors of the economy
and allocate and distribute the same to the various needy
sectors is known as ----------
2 The transformation of savings into investment and Ans True
consiumption is facilitated by the active role played by
the financial system. True or false.
3 Banks, Financial Institution mutual funds etc are Ans: True.
examples of Financial Intermediaries. True or False.
4 Financial market include Money Market, Debt Market, Ans Capital Market
Forex Market and ----
5 Treasury bills are money market instrument True or Ans : true
6 Certificate of Deposit is a money market instrument True Ans True.
7 Commercial paper is a money market instrument True or Ans True
8 Call money and Notice money are Money market Ans True.
instruments True or false.
9 G Securities issued by Central and State Government Ans True
are instruments in Debt Market. True or false.
10 Bonds issued by Financial Institution are instruments in Ans True.
Debt market. True or false
11 Reserve Bank of India has two distinct roles one is Ans:
Monetary Control including controlling inflation and other Bank supervision
12 Reserve Bank of India is exercising Monetary Control Ans Bank rate.
through 1) cash Reserve Ratio, 2) Statutory Liquidity
Ratio 3) REPO rate and ---------
13 Central Bank (RBI) is lender of the last resort to other Ans : True.
Banks True or false.
14 ------------ is responsible for ensuring an efficient payment Ans : True.
& settlement system. True or false.
15 Reserve Bank of India has supervision over 1) Ans : True
Commercial Bank 2) NBFC 3) Primary dealers 4)
Financial institution True or false.
16 Reserve Bank of India is Banker to Government True or Ans True.
17 Capital Market Regulator in India is SEBI True or false Ans True
18 The standard rate at which RBI is prepared to buy or re Bank rate
discount bills of exchange or other eligible commercial
papers from Banks is known as
19 No Bank can hold shares in a company as pledge or Sec 19(ii) of BR Act
mortgage in excess of the limit of 30% of the paid up
capital of that company or 30% of the Bank’s paid up
capital and reserve which ever is less. This is covered in
20 A mutual fund is a form of collective investment that Securities and
pools money from investors and invests in stocks, debt Exchange Board of
and other securities. It is a less risky investment opinion India)
for an individual investor.
Mutual funds require the regulators approval to start an SEBI
asset management Company (the fund) and each
scheme has to be approved by regulator before it is
launched. Who is the regulator.
21 Foreign based funds authorized by the Capital Market Foreign Institutional
Regulator to invest ion Indian Equity and debt market Investors.
through stock exchanges. These are called.
22 Registrars maintain a Register of share and debenture Securities and
holders and process share and debenture allocation Exchange Board of
when issues are subscribed. Registers need approval India)
from Regulator. Who is the regulator
23 Depository hold securities in ---------- form (as opposed to Electronic form
Physical form) maintains accounts of depository (Demat)
participants who in turn maintains sub accounts of their
customers. On receiving instructions from Stock
exchange clearing house supported by documentation a
depository transfers securities from the sellers account
to buyers account in ------------ form
24 A Bank undertake a number of activities such as Investment Bankers
undertaking the issue of stocks fund raising and or
management. They also provide advisory services and merchant Bankers.
counsel on mergers amalgamation etc. They are
licensed by capital market regulators. The above Bank is
25 Brokers perform the job of intermediating between Brokerage.
buyers and sellers of securities. They help to build up an
order book carry out price discovery and are responsible
for brokers contracts being honoured. These services are
subject to -------------
26 Doing Banking business with Industrial and business Wholesale Banking.
entities – mostly Corporate and trading houses including
multinationals domestic business houses and prime
public sector Companies.
27 The Credit information Bureau (India) Ltd (CIBIL) Consumer
incorporated in 2000, aim at fulfilling the need of credit (Individual)
granting institution for comprehensive credit information
by collecting collating and disseminating credit
information pertaining to both commercial and --------------
28 ------------ refers to the dealing of commercial Banks with Retail Banking
individual customers. Both on liabilities and assets side
of the balance sheet. Fixed, Current, Savings accounts
on the liability side and personal loans housing auto
loans and education loans on the asset side are the
important product offered by Banks to individuals. The
related ancillary service include Credit card, debit card
29 Today’s retail Banking sector is characterized by three 1).Multiple product.
basic features. What are they.
30 Multiple product in retail Banking means Deposit, Credit
card, Insurance ,
31 Multiple channels of distribution in retail Banking means. Call Centres,
and ATM (Kiosk)
32 Multiple customer Group in retail Banking means Consumer, Small
33 Zero Balance Account for Salaried class people is a Retail Deposit
34 Banks provide preshipment finance in the form of export Export packing
packing credit both in rupee as well as in foreign credit.
currencies to assist exporters for manufacturing or
packing the goods for export from India.
35 In respect of export bills drawn under LC , if the Negotiation of
documents are found to be strictly in terms with LC export bill under
condition the Bank of the export customer / or the LC.
nominated Bank make payment of bill to the exporter
and send the bill for realization to the LC issuing Bank or
reimbursing Bank. This process is known as -----------
36 This facility enables Indian Exporters to extend term Suppliers Credit.
credit to importers (overseas) of eligible goods at the
post shipment stage. This is known as --------------------
37 EEFC Account stands for Exchange Earners
38 ADR stands for American
39 ADR are typically traded on US national stock exchanges True
such as New York Stock exchange or American Stock
40 GDR stands for Global Depository
41 In --------------- Securities share bond debentures are The primary market
offered to the public for subscription for the purpose of
raising capital or fund.
42 The primary market is classified into public issue market Private placement.